SURYAJYOTI SPINNING MILLS LIMITED Report 2008-09.pdf · SURYAJYOTI SPINNING MILLS LIMITED NOTICE ... of the Company at Burgul Village, Farooqnagar Mandal, Mahabubnagar District, Pin-509

SURYAJYOTI SPINNING MILLS LIMITED

1

BOARD OF DIRECTORS

Dr. Akkineni Nageswara Rao Director

Sri. Ankit Jain Director

Sri Sanjeev Mitla Director

Sri K Harishchandra Prasad Director

Sri R. K. Agarwal Managing Director

Sri A. K. Agarwal Executive Director

Company SecretarySmt. N. Madhavi

Vice President (Finance)Sri. M. Bala Guravaiah

Registered Office

Burgul VillageFarooqnagar MandalMahabubnagar District, A.P.

Corporate Office

7th Floor, Surya Towers105, Sardar Patel RoadSecunderabad - 500 003.

Factories

Makthal VillageMakthal - Narayanpet RoadMahabubnagar District. A.P.

Burgul VillageFarooqnagar MandalMahabubnagar District. A.P.

Rajapur VillageBalanagar Mandal,Mahabubnagar District. A.P.

Kucherkal VillageBalanagar Mandal,Mahabubnagar District. A.P.

Auditors

M/s. Brahmayya & Co.,Flat No.403 & 404,Golden Green Apartments,Irrum Manzil Colony,Hyderabad.

Bankers

State Bank of IndiaIndustrial Finance Branch, Hyderabad

Axis Bank Ltd.,Begumpet, Hyderabad

IDBI Bank Ltd.,Chapel Road, Hyderabad.

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NOTICE

Notice is hereby given that the 26th Annual GeneralMeeting of the Members of SURYAJYOTI SPINNIGMILLS LIMITED will be held at the Registered Officeof the Company at Burgul Village, FarooqnagarMandal, Mahabubnagar District, Pin-509 202 A.P.,on Saturday, the 26th day of September, 2009 at11.30 a.m., to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the audited Profitand Loss Account for the year ended 31st March2009 and the Balance Sheet as on that datetogether with the Reports of the Board ofDirectors and Auditors thereon.

2. To appoint a Director in place of Dr. AkkineniNageswara Rao, who retires by rotation andbeing eligible, offers himself for re-appointment.

3. To appoint a Director in place of Sri. Ankit Jain,who retires by rotation and being eligible, offershimself for re-appointment.

4. To appoint Auditors and fix their remuneration.

SPECIAL BUSINESS

5. To consider and if thought fit, to pass, withor without modification(s) the followingresolution as an ORDINARYRESOLUTION.

"RESOLVED THAT the consent be and is herebyaccorded to the Board of Directors pursuantto the provisions of section 293(1)(a) and otherapplicable provisions, if any, of the CompaniesAct, 1956, for the creation, by the Board ofDirectors of the Company of such mortgages,charges and hypothecations, in addition to theexisting mortgages and charges andhypothecation(s) created by the Company asthe Board may determine on the assets of theCompany, both present and future, togetherwith power to takeover the management ofthe company in certain events to and in favourof State Bank of India, Axis Bank Limited andIDBI Bank Limited to secure the Working Capital

of Rs. 12200 lakhs sanctioned by State Bank of

India, Axis Bank Limited and IDBI Bank Limited

together with interest thereon at the respective

agreed rates, compound interest, additional

interest, liquidated damages, commitment

charges, premia on pre-payment or on

redemption, costs, charges, expenses and other

monies payable by the Company to State Bank

of India, Axis Bank Limited and IDBI Bank Limited

under their loan agreements entered into/to be

entered into in respect of the said borrowings."

6. To Consider and if thought fit, to pass, withor without modification(s), the followingResolution as an ORDINARY RESOLUTION.

"RESOLVED that the consent of the Company

be and is hereby accorded to the Board of

Directors pursuant to the provisions of section

293(1)(a) and other applicable provisions, if any,

of the Companies Act, 1956, for the creation

of such mortgages, charges and hypothecations,

in addition to the existing mortgages, charges

and hypothecations created by the Company

as the Board may determine on the assets of

the Company, both present and future, together

with power to takeover the management of

the company in certain events to and in favour

of IDBI Bank Ltd., for the term loan of Rs.12

Crores, together with interest thereon at the

respective agreed rates, compound interest,

additional interest, liquidated damages,

commitment charges, premia on pre-payment

or on redemption, costs, charges, expenses and

other monies payable by the Company to IDBI

Bank Ltd., under Loan Agreement entered into/to be entered into, in respect of the saidborrowings."

By Order of the Board For SURYAJYOTI SPINNING MILLS

LIMITED

N. MadhaviAGM (Legal) & Company Secretary

Place : SecunderabadDate : 27th June, 2009


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NOTES

1. The Register of Members and Share Transfer

books of the Company will remain closed from

23rd September 2009 to 26th September 2009

(both days inclusive) for the purpose of Annual

General Meeting.

2. A Member entitled to attend and vote is entitled

to appoint a proxy to attend and vote instead

of himself / herself and such proxy need not be

a member of the Company.

3. The instrument appointing a proxy must be

deposited with the Company at its Registered

Office / Corporate Office not less than 48 hours

before the time for holding the meeting.

4. An Explanatory Statement pursuant to section

173(2) of the Companies Act, 1956 in respect

of special business items is annexed hereto.

5. The Members are requested to notify change,

if any, in their address to Registrar and Transfer

Agent viz., Sathguru Management Consultants

Pvt. Ltd., Plot No.15, Hindi Nagar, Behind Sai

Baba Temple, Punjagutta, Hyderabad - 500 034

immediately, quoting their Folio No.

6. All communications regarding shares are to be

addressed to the Registrars and Transfer Agents

at the address mentioned above.

7. A Member desirous of getting any information

on the accounts or operations of the Company

is requested to forward his/her queries to the

Company at least seven days prior to the date

of the meeting for consideration of the

management to deal at the meeting.

8. Unclaimed Dividends will be transferred to the

Investor Education and Protection Fund set up

by the Central Government on the date

mentioned below:

Financial Date of Due for

Year Declaration transfer on

2004-05 30.09.2005 05.11.2012

2005-06 29.09.2006 04.11.2013

2006-07 28.09.2007 03.11.2014

2007-08 20.09.2008 25.10.2015

Shareholders who have not so far encashed the

dividend warrant(s) are requested to seek

revalidation/issue of duplicate warrants/Demand

drafts by writing to the Registrars/Company.

Also note that no claim shall be against said

fund or Company in respect of any amounts

which were unclaimed and unpaid for a period

of seven years from the date they became first

due for payment and no payment shall be made

in respect of such claims.

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EXPLANATORY STATEMENTExplanatory Statement pursuant to Section173(2) of the Companies Act, 1956.

Item No. 5

The Company's Bankers viz., State Bank of India,Axis Bank Ltd., and IDBI Bank Limited has enhancedand renewed working capital facilities from Rs.107.00Crores to Rs.122.00 crores (Rupees One Hundredand Twenty Two crores only). As per the terms ofthe sanction, the Company has to create first chargeon the current assets of the Company and secondcharge on the fixed assets of the Company.

Since the mortgaging by the Company of its currentassets and fixed assets as aforesaid may be regardedas disposal of the company's properties /undertakings, it is necessary to obtain the approvalof the Members U/s. 293(1)(a) of the CompaniesAct, 1956 for the creation of the said mortgages.

None of the Directors are interested or concernedin the above Resolution.

The Board recommends the resolution for theapproval of the Members.

Item No. 6

The Company has obtained sanction of Term Loanof Rs.12 Crores from IDBI Bank Limited to partfinance the acquisition of new machinery and costoverrun of Fabric Unit at Kucherkal, MahaboobnagarDist.

The financial assistance from IDBI Bank Limited isrequired to be secured by way of first charge onthe immovable properties of the Company, rankingpari-passu charge with the existing term loans.

Since the mortgaging by the Company of itsimmovable properties as aforesaid in favour of IDBIBank Limited may be regarded as disposal of theCompany's properties / undertaking in certain eventsof default, it is necessary for the Members to passa resolution under Section 293(1)(a) of theCompanies Act, 1956, for creation of the said charge/ mortgage.

None of the Directors are interested or concernedin the above Resolution.

The Board recommends the resolution for theapproval of the Members.

By Order of the Board For SURYAJYOTI SPINNING MILLS

LIMITED

N. MadhaviAGM (Legal) & Company Secretary

Place : SecunderabadDate : 27th June, 2009


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INFORMATION PURSUANT TO CORPORATE GOVERNANCE CLAUSEOF THE LISTING AGREEMENT REGARDING THE DIRECTORS SEEKING

RE-APPOINTMENT IN THE ANNUAL GENERAL MEETING

Dr. AKKINENI NAGESWARA RAO

Dr. Akkineni Nageswara Rao aged about 85 years, is one of the most well known Cine Artistes in theCountry having acted in more than 250 Films and has been recipient of several prestigious National Awardsincluding Dada Saheb Phalke Award. A well-known Philanthropist, he is associated with several cultural andeducational institutions in the state.

Names of the other Companies in which he is a Director:

1. Suryavanshi Spinning Mills Limited - Director

2. Suryalakshmi Cotton Mills Limited - Director

3. Akkineni Agros Private Limited - Director

4. Annapurna Studios Private Limited - Chairman

5. Prasad Media Corporation Limited - Additional Director

Dr.Akkineni Nageswara Rao is holding 1,000 shares in the Company as on March 31, 2009.

SRI ANKIT JAIN

Sri. Ankit Jain, aged about 36 years, is a commerce graduate and having experience of about 14 years intextile business.

Names of the other Companies in which he is a Director:

1. Diamond Expofab Limited - Director

2. Mark Agro Private Limited - Director

3. Diamond Capital Services Limited - Director

4. Mathur Construction Private Limited - Director

5. Nistha Fashions Private Limited - Director

6. Lokesh Polymers Private Limited - Director

7. Novelty Developers Private Limited - Director

8. K. D. Electronics Overseas Private Limited - Director

Sri Ankit Jain is holding 100 shares in the Company as on March 31, 2009.

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DIRECTORS’ REPORTToThe Members,

Your Directors have pleasure in presenting the 26thAnnual Report together with the audited accountsfor the financial year ended 31st March 2009.

FINANCIAL RESULTS(Rs.in Lacs)

As at As at31-03-2009 31-03-2008

a) Gross Sales 20952.76 20468.54

b) Net Sales 20952.32 20467.94

c) Profit beforeDepreciation and taxes 1299.65 1819.04

d) Less: Depreciation 809.89 763.88

e) Profit Before Tax 489.76 1055.16

f) Provision for Tax 97.00 118.00

g) MAT Credit Entitlement (38.35) 0.00

h) Fringe Benefit Tax 9.00 8.50

i) Deferred Tax Liability 121.58 151.45

j) Profit after taxes 300.53 777.21

k) Add: Balance broughtforward from last year 2305.62 1827.62

l) Amount available forappropriation 2606.15 2604.83

APPROPRIATIONS:

1. Provision forproposed dividend 0.00 84.80

2. Corporate Dividend Tax 0.00 14.41

3. Transfer toGeneral Reserve 0.00 200.00

4. Balance carried forwardto Balance Sheet 2606.15 2305.62

TOTAL 2606.15 2604.83

OPERATIONS

Production:

Your Company had produced during the year 16103

MTs of yarn as against 16,979 MTs in 2007-2008

resulting a decrease in production by 5%. Production

of cotton yarn was reduced from 5,814 MTs to 5799

MTs whereas the production of Synthetic yarn was

decreased from 11,165 MTs in 2007-2008 to 10304

MTs in 2008-2009.

Sales:

Your Company achieved a turnover of Rs. 20952

lakhs compared to Rs.20,468 lakhs for the year 2007-

2008 representing an increase of around 3%. Your

Company had earned a net profit after tax of Rs.300

lakhs during the year 2008-2009, when compared

with a net profit after tax of Rs.777 lakhs during the

year 2007-2008. The main reasons for the reduction

in net profit are increase in interest cost,

depreciation, raw material prices; severe power cut

resulting in lower capacity utilization.

Changes in Share Capital:

During the financial year 2008-09:

(i) In accordance with the resolution passed by

the shareholders at the 25th Annual General

Meeting held on 20/09/2008, the Committee

of the Board allotted 13,00,200 equity shares

on preferential basis to Mr.Pietro Valenti, a

Non-Promoter, at Rs.50/- each.

(ii) In accordance with the resolution passed by

the shareholders at the Extraordinary General

Meeting held on 02/03/2009, the Committee

of the Board allotted 7,00,000 equity shares

on preferential basis to the Promoters, at

Rs.16/- each.

The above allotments resulted in increase in the

paid-up equity share capital of the Company from

Rs.14,13,24,550/- to Rs.16,13,26,550/-.

Dividend:

Considering the necessity of ploughing back of profits

for meeting the part of the cost of the ongoing

bottom weight fabric project at Kucherkal Unit and

repayment of term loans, your Directors unable to

recommend dividend (6% dividend paid for previous

year).


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Modernisation and Expansion:

The forward integration project taken up by the

Company to set up a bottom weight fabric unit at

Kucherkal village, Mahabubnagar District, A.P., at a

cost of Rs.118 crores is under advanced stage of

completion. The trial runs are under progress. The

project is likely to commence the commercial

production in the second quarter of current financial

year.

Capital Expenditure:

During the year under review your Company had

incurred capital expenditure of Rs. 9907 lakhs.

Exports:

Your Company has exported yarn produced within

its own plant amounting to Rs. 9186 lakhs. Out of

this, yarn valued Rs. 1478 lakhs was exported

through third parties. Including yarn procured from

outside, your company has achieved export turnover

of Rs. 10,263 lakhs when compared with the

turnover of Rs. 9404 lakhs in the previous year.

During the year under review, your company has,

while made efforts to widen the depth and

penetration of the existing markets also extended

to new markets such as Syria, Germany, Chile,

Mexico, Spain, Columbia, Uruguay.

Directors:

In terms of the provisions of Section 255 and 256

of the Companies Act, 1956, Dr. Akkineni

Nageswara Rao and Sri Ankit Jain will retire at the

ensuing Annual General Meeting and being eligible

offer themselves for re-appointment. Your Board of

Directors recommends their re-appointment.

Brief profiles of Dr. Akkineni Nageswara Rao and

Sri Ankit Jain, the nature of their expertise in specific

functional areas and the number of Companies in

which they hold directorships and memberships/

Chairmanships of Committees of the Board, as

stipulated under Clause 49 of the Listing Agreement

with the Stock Exchanges, have been provided

elsewhere in this Annual Report.

Directors' Responsibility Statement:

Pursuant to the requirement under section 217

(2AA) of the Companies Act, 1956 with respect to

Directors' Responsibility statement, it is hereby

confirmed:

(i) That in the preparation of the accounts for

the financial year ended 31st March 2009, the

applicable accounting standards have been

followed and there were no material

departures.

(ii) That the directors have selected such

accounting policies and applied them

consistently and made judgements and

estimates which are reasonable and prudent

so as to give a true and fair view of the state

of affairs of the Company at the end of the

financial year and of the profit of the Company

for the year under review;

(iii) That the directors have taken proper and

sufficient care for the maintenance of adequate

accounting records in accordance with the

provisions of Companies Act 1956 for

safeguarding the assets of the Company and

for preventing and detecting fraud and other

irregularities.

(iv) That the directors have prepared the accounts

for the financial year ended 31st March 2009

on a `going concern' basis.

Corporate Governance:

Pursuant to Clause 49 of the Listing Agreement on

Corporate Governance: (a) Management Discussion

and Analysis, (b) Report on the Corporate

Governance and (c) Certificate from the Auditors'

of the Company regarding compliance of the

Corporate Governance also form part of this Annual

Report.

Auditors:

M/s Brahmayya & Co., Chartered Accountants, who

are the statutory auditors of the Company hold

office upto the conclusion of the ensuing Annual

General Meeting and have confirmed their eligibility

and willingness for re-appointment.

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Cost Auditors:

Mr. S.G. Ramakrishna, Cost Accountant, wasappointed as Cost Auditor of the Company subjectto the consent of the Government of India toconduct cost audit of the Company for 2009-10.

Fixed Deposits:

The Company has not invited / accepted depositsfrom the public within the meaning of Section 58Aof the Companies Act, 1956.

Conservation of Energy, Technology Absorption,Foreign Exchange Earnings and Outgo:

The particulars as prescribed under section 217 (1)(e) of the Companies Act, 1956 read with theCompanies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988 are set out inAnnexure I to this report.

Particulars of Employees:

The information required under Section 217 (2A)of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975is given in Annexure - II.

Acknowledgements:

Your Directors wish to place on record theirappreciation for the valuable support and co-operation extended by State Bank of India, AxisBank Ltd., IDBI Bank Limited, State Bank ofHyderabad, and State and Central GovernmentAgencies.

Your Directors also wish to place on record theirsincere appreciation of the contribution made bythe employees of the Company and are thankful tothe Shareholders for their continued patronage andsupport.

For and on behalf of the Board of Directors

R.K. AGARWALManaging Director

Place: Secunderabad A.K. AGARWALDate: 27th June, 2009 Executive Director


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ANNEXURE-1 TO THE DIRECTORS' REPORT

Details as required under Companies (Disclosure of particulars in the Report of Board of Directors) Rules,1988, read with clause (e) of Subsection (1) of Section 217 of the Companies Act, 1956.

I. Conservation of Energy

The Company is making necessary efforts for conservation of energy. To reduce the energy cost,energy efficient equipments were used and the effect of the same has been felt.

FORM - A

Form for disclosure of particulars with respect to conservation of energy

2008-2009 2007-2008A. POWER AND FUEL CONSUMPTION

1. Electricity

a. Purchased Unit (Nos.) 5,51,83,904 5,45,48,939

Total amount (Rs.) 15,89,34,390 15,97,95,740

Rate / Unit (Rs.) 2.88 2.93

b. Own Generation

i) Through Diesel Generator

Unit (Nos.) 1,84,295 1,99,458

Unit per Ltr. Of Oil 2.05 2.83

Cost / Unit (Rs.) 16.76 11.99

ii) Through Steam Turbine / Generators - NIL - - NIL -

2. Coal (Specify quality and where used) - NIL - - NIL -

3. Furnace Oil - NIL - - NIL -

4. Other / Internal Generators - NIL - - NIL -

B. CONSUMPTION PER UNIT OF PRODUCTION (Kg.)

Consumption per Kg. of Production Current Year Previous Year

Electricity (No. of Units) 3.43 3.22

Furnace Oil Nil Nil

Coal (Specify Quality) Nil Nil

Others (Specify) Nil Nil

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FORM - B

A. Form for disclosure of particulars with respect to Technology absorption, Research andDevelopment (R&D)

1. Specific areas in which R & D carried : The Company is having R&D in introduction andout by the Company development of value added products

2. Benefits derived as a result of : New value added products were developed.the above R & D

3. Future Plan of action : To further develop more value added productsand improve the quality of the products.

4. Expenditure on R & D : Expenditure on in-house R & D has been shownunder respective heads of expenditure in the profitand loss account as no separate account is maintained.

B. Technology absorption, adaptation and innovation

1. Efforts, in brief, made towards technology: The company had adopted Absorption, adaptationan innovation indigenous technology and innovatedupon the same.

2. Benefits derived as a result of the above : Product improvement, increase in yield and qualityefforts e.g. product improvement, cost resulted increase in Turnover.reduction, substitution etc.

3. In case of imported technology : No technology has been imported during(imported during the 5 years reckoned the last 5 years.from the beginning of the financial year)following information may be furnished

(a) Technology imported : Nil

(b) Year of import : N.A.

(c) Has technology been fully absorbed : N.A.

(d) If not fully absorbed, areas wherethis has not taken place, reasonstherefore and future plans of action : N.A.

C. Foreign Exchange Earnings and Outgo :(a) Activities relating to exports, initiatives : The information on foreign Exchange Earnings and

taken to increase Exports, development out-go is furnished in Schedule 20, Itemsof new export markets for production 11, 12 & 13 in Notes to accounts.and service, and export plans.


R.K. AGARWALManaging Director

Place : Secunderabad A.K. AGARWALDate : 27th June, 2009 Executive Director


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ANNEXURE - II TO THE DIRECTORS' REPORT

Information pursuant to Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars ofEmployees) Rules, 1975 and forming part of the Directors' Report for the year ended 31st March 2009.

Name Sri R.K. Agarwal

Age 61 years

Qualification B.Sc.,

Date of Employment 18.01.1992

Designation Managing Director

Remuneration (Rupees) 35,79,150

Experience 37 years

Last Employment Joint Managing Director, Suryalakshmi Cotton Mills Ltd.,

Notes: 1. Remuneration as shown above includes Salary, Commission, Company's Contribution to ProvidentFund and other perquisites.

2. Nature of employment: Contractual

3. Sri R.K.Agarwal is a relative of Sri A.K.Agarwal, Executive Director.


R.K.AGARWALManaging Director

Place : Secunderabad A.K.AGARWALDate : 27th June, 2009 Executive Director

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MANAGEMENT DISCUSSIONAND ANALYSISA. TEXTILE BUSINESS

The global economy is passing through severe

economic recession. The recession started

from the USA in the last quarter of 2007 from

the financial Crisis in the US housing sector,

which developed into global economic crisis.

As a consequence, the global textile industry

has been passing through turbulent time - not

seen the past in terms of the magnitude and

the spread of the crisis as well as the duration

of crisis with no ending foreseen in the

immediate future. The international trade in

textiles and clothing reached to $583bn in

2007, which is expected to decline by $20-

25bn in 2008. The decline may accelerate

during the year 2009 with recovery projected

far away. Obviously, this does not augur well

for the textile industry.

Being export oriented, Indian textile industry,

which derives growth from the export markets

in USA and EU, has suffered a lot during the

Current economic slowdown. The Indian

textile industry exports about 40% of its

output. Of this, about 60% is destined to USA

and EU markets. A steep reduction in the

demand of textile and clothing products in

major importing economies has resulted into

decreased imports, which in turn has depressed

textile exports from India. It is estimated that

the textile and clothing exports from India may

decline, first time in many years, in the current

financial year after growing by more than 15%

during last 5 years. The decline in the US textile

and clothing imports indicates that recovery is

still far away and may take a longer time to

recover than anticipated.

As per the industry estimates, the textile

exports from India may decline by 10-15%

from $22bn in 2007-08 to about $20bn in

financial year 2008-09, although countries like

China, Bangladesh and Vietnam are expected

to record growth in their textile exports. It is

evident that the Indian textile exports can only

grow with further strengthening of our

competitiveness in the global market. The next

level of competitiveness in the textile market

hinges more on Government Policies than on

operations of the textile industry. For instance,

steep rise in MSP of cotton and incentives on

export of raw cotton have seriously impacted

the working of the textile industry. However,

piecemeal efforts like increase in drawback

rates, which are still lower than pre-Sept. 2008

level, and easy export finance have been

initiated by the Government. We feel that the

textile industry needs an integrated

development approach for growth in the

coming year.

During the last four years, the Indian textile

industry has attracted huge investments. As a

result, the capacity in the entire textile chain

has expanded beyond the requirements of the

current demand. In the context of declining

economic activities, even the domestic market

is not able to absorb the surplus generated

from reduced exports. It is tough time for the

industry with leading firms reporting financial

strains. The crisis has clearly shown the

weaknesses in the Indian textile industry

compared to competing textile economies. The

industry, therefore, has to strengthen its

competitiveness to realize the Vision of $50bn

textile exports set out in the National Textile

Policy 2000.

COTTON SCENARIO

Since the launch of "Technology Mission on

Cotton" by Government of India in February

2000 significant achievements have been made

in increasing yield and production through

development of high yielding varieties, better

farm management practices, increased area

under cultivation of BT cotton hybrids etc. All

these developments have resulted into a

turnaround in cotton production in the country

in last 3-4 years. The yield per hectare, which


13

has remained stagnant at about 300 kg/hectare

for more than a decade, increased substantially

and reached a level of 526 kg/hectare. India is

the second largest producer of cotton in the

World with production of around 5.36 million

tons of cotton in the year 2008, accounting for

around 20% of World production.

However, as per the Cotton Advisory Board,

the Indian cotton crop was 290 lakh bales for

the year 2008-09 as against 315 lakh bales for

the year 2007-08 due to reduction in cultivated

area and product yield, which has come down

from 567 kgs to 526 kgs per hectare.

According to International Cotton Advisory

Committee (ICAC), the global cotton

production is estimated at 26.90 million tons

for the year 2008-09 as against 25.87 million

tons for the year 2007-08. The world cotton

consumption is estimated at 27.40 million tons

in 2008-09 as against 27.14 million tons in 2007-

08. Since the consumption is more than the

supply, the cotton price for the year 2008-09

was higher. Further, domestic cotton prices

have gone up due to substantial increase in

minimum support price.

MARKETING

India is a large supplier of cotton yarn in world

market. Pakistan is also going stronger for its

supply of cotton yarn. Pakistan's exports of

cotton yarn are largely of coarse and medium

counts and as such India continues to hold the

upper position.

Your Company is mainly in export of medium

and fine combed cotton yarn, synthetic yarn

and it has been constantly focusing its efforts

to cater to high end users. To meet the

competition, the Company always tries to

improve its quality of yarn. The Company

exports its yarn mainly to Peru, Brazil,

Columbia, Italy, Turkey, Syria, Germany,

Mexico, Chile, Spain, Uruguay etc,. The

Company maintained good relations with all

its overseas customers which have been dealing

with the Company over the years, by adhering

to quality standards, delivery schedules and

competitive price. In addition, the company is

also exploring new customers in domestic as

well as international markets.

The Chinese textile industry is currently facing

critical period on account of rapid appreciation

of Chinese currency against US dollar, rising

cotton prices, hike in wages, acute power

shortage, reduction in the rates of export

rebate etc. Consequently, Chinese exports of

textiles and clothing are declining especially in

the USA, thus, provides an opportunity to India

for improving its export performance.

In the past, the textile industry did not develop

in an organized manner and the policy favoured

fragmentation resulting in organized players

suffered heavily because of the fiscal structure

and the policy of the Government. Fortunately,

in the last few years, the Government has now

provided level playing field to all the sectors of

textile industry and therefore, large investments

are coming in the textile industry. Government

has also given good incentive under Technology

Upgradation Fund Scheme and also benefits to

the processing sector, which will give boost to

the textile industry.

B. OPPORTUNITIES AND THREATS

The future of Indian Textile Industry is highly

depending on availability of raw material at acompetitive price. With the introduction ofHybrids and BT Cotton Seed, the cottonproduction in India is increasing every year.The government is making efforts to supply

proper quality seeds at a reasonable price to

the growers and it is expected that the supply

of quality cotton will be comfortable.

C. RISKS AND CONCERNS

The dismantling of quota has resulted in global

competition and every country has to become

cost competitive and efficient. India suffers on

account of high transaction cost, poor

infrastructure, uncertainty about continuation

14


of export incentives, high cost of labour, power

and Government's limitations to introduce labour

reforms. However, the Government is fully

aware of the global challenges and all these issues

are being addressed. It is hoped that

Government will make its best efforts to provide

competitive environment to the textile industry.

Raw Cotton, an agricultural product is the key

raw material used for the manufacture of

cotton yarn and is dependent on monsoon.

Adequate availability of raw cotton at the right

prices is crucial for the Company. Any

disruption in the supply and / or volatile changes

in the cost structure could affect the

profitability of the Company.

The Spinning units are highly capital intensive

and have to maintain large raw material

inventory levels due to its seasonality. Your

Company makes all efforts to have efficient

inventory management and constant efforts are

being made to monitor the inventory levels

keeping in view of high interest costs.

D. OPERATIONS

The Company is producing a wide range of

yarns in cotton, polyester, viscose and

polyester-viscose blends.

The Company has three yarn manufacturing

facilities at Makthal, Burgul, and Rajapur, and

one fabric manufacturing facility at Kucherkal,

all in the Mahabubnagar District of Andhra

Pradesh. Each of the units is at a distance of

less than 100 kilometers from one another,

and also accessible from the corporate office

in Hyderabad.

The Company's manufacturing capacities

comprise 86,560 spindles and 20 million meters

of speciality / value added bottom weight

fabrics. Each of the production facilities is

specialized in specific aspects of Suryajyoti's

product portfolio. Makthal largely manufactures

cotton yarn of medium to coarser counts,

Burgul is completely dedicated to the

production of synthetic and blended yarns, and

Rajapur produces only cotton yarn of higher

counts. For complete operational details, the

stakeholders are requested to refer to the

Directors' Report.

E. NEW BUSINESS INITIATIVE

Given its existing strengths in the yarn-

manufacturing business, Suryajyoti has moved

up the value chain to manufacture bottom-

weight fabrics. It has set-up India's first specialty

bottom weight fabric weaving, dyeing and

finishing plant in technical collaboration with

an Italian company, Pangea SRL. The

collaboration would give Suryajyoti an avenue

to provide high fashion/low costs options to

some of the best-known designer brands in

the world.

Pangea, headed by Mr. Pietro Valenti who has

been running and operating a specialty bottom

wear fabric plant in Italy for over three decades,

has been servicing the requirements of many

major global fashion labels including discerning

high-fashion Italian and global brands like Dolce

& Gabbana, Versace, Giorgio Armani, and

Roberto Cavali, among others.

The fabric manufactured by Suryajyoti would

be sold in India and overseas under a brand

name - 'Pangea Fabrics'. The major customers

in the domestic market would be the export

houses who cater to the needs of U.S.A and

EU markets in the bottom wear.

The bottom-weight fabric facility has been set

up at Kucharkal Village, Mahabubnagar District

in Andhra Pradesh at a cost of above Rs. 100

crores. The project was financed largely

through debt, available to the company under

the TUF scheme and through the proceeds

from a FCCB issue and internal accruals. The

project is likely to commence its commercial

production in the second quarter of current

financial year.

At optimum capacity, Suryajyoti will

manufacture twenty million meters of bottom

wear fabrics. The unit will produce the bottom


15

wear fabric having both special & normal

finishes. The bottom weight fabric project is

expected to have a reasonable payback period

and result in improvement in margins and

returns on an overall basis.

F. INTERNAL CONTROL SYSTEMS ANDTHEIR ADEQUACY

The Company has proper and adequate internal

control system commensurate with the size

and complexity of the organization. The internal

control is supplemented by an extensive

programme of internal audits, reviewed by

management. The internal control is designed

to ensure that the financial and other records

are reliable for preparing financial statements

and other data.

G. OUTLOOK

It is heartening to note that the Finance Minister

has announced that new Government is fully

committed to provide sustained stimulus to

export-oriented and employment generating

industries like textiles. Further, it is earnestly

hoped that the new Textile Minister will take

a holistic view of the entire textile scenario

and initiate suitable measures for reviving the

textile industry.

With the forward integration, your company

would be able to expand the market base and

diversify its product range. There are

indications that the global recession will abate

towards the end of current year and the

demand will revive, which will help the Textile

Industry to regain its momentum.

H. MATERIAL DEVELOPMENTS IN HUMANRESOURCES / INDUSTRIAL RELATIONSFRONT, INCLUDING NUMBER OFPEOPLE EMPLOYED

Suryajyoti's HR policy has been based on the

underlying values of fairness, merit, equal

opportunity and social responsibility. The

spinning Industry is highly labour oriented and

the company follows best practices to attract,

train and retain the resource pool. With utmost

respect to human values, the company served

its human resources with integrity, through a

variety of services by using appropriate training,

motivation techniques and employee welfare

activities. As a result, industrial relations are

cordial and satisfactory.

80% of the workers employed by the

Company reside in accommodation provided

by the company close to production units. By

providing fair employment conditions and an

environment conducive to social development,

the company has created strong relationships

with its workforce to manage the attrition rate

successfully. As on 31st March 2009, the

Company has about 1250 employees in its

offices and factories.

I DISCUSSION ON FINANCIALPERFORMANCE WITH RESPECT TOOPERATIONAL PERFORMANCE

Please refer to Directors' Report on

performance review.

CAUTIONARY STATEMENT

Readers are advised to kindly note that the

above discussion contains statements about

risks, concerns, opportunities, etc., which are

valid only at the time of making the statements.

A variety of factors known/unknown, expected

or otherwise may influence the financial results.

These statements are not expected to be

updated or revised to take care of any changes

in the underlying presumptions.

Readers may therefore appreciate the context

in which these statements are made before

making use of the same.

16


REPORT ON CORPORATE GOVERNANCE

1. Brief Statement on Company's Philosophy on Code of Governance.

The Company believes that good corporate governance practices should be enshrined in all activities ofthe Company. This would ensure efficient conduct of the affairs of the Company and help the Companyachieve its goal of maximizing value for all its stakeholders. The Company will continue to focus itsresources, strengths and strategies to achieve its vision, while upholding the core values of transparency,integrity, honesty and accountability, which are fundamental to the Company.

The Company has a strong legacy of fair, transparent and ethical governance practices. The Company'scorporate governance philosophy has been further strengthened through the Code of conduct and theCode of Conduct for Prevention of Insider Trading.

The Company is in compliance with the requirements of the revised guidelines on corporate governancestipulated under clause 49 of the Listing Agreement with the Stock Exchanges.

2. BOARD OF DIRECTORS:

a. Composition of the Board:

As on 31st March 2009, the Board consists of Six Directors. There are two whole-time Directors.The remaining four are non-executive and independent directors. The composition of the Boardis in conformity with Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

Name of the Director Category

Sri. R. K. Agarwal Managing Director/Promoter

Dr. Akkineni Nageswara Rao Non-Executive and Independent Director

Sri. Sanjeev Mitla Non-Executive and Independent Director

Sri. K. Harishchandra Prasad Non-Executive and Independent Director

Sri. Ankit Jain Non-Executive and Independent Director

Sri A. K. Agarwal Executive Director/Promoter

b. Number and dates of Board Meetings:

Five Board Meetings were held during the year ended 31st March 2009. These were on 3rd May2008, 30th June 2008, 31st July 2008, 31st October 2008 and 31st January 2009. The maximumtime gap between any two Board meetings during the year was less than four months.

c. Directors' attendance record and directorships held:

The Attendance of Directors at the Board Meetings and at the previous Annual General Meetingand directorships held was as under:


17

Number of Board Whether Number of other No. of Committee

Meetings attended attended Directorships in positions held in

Name of the Director during the year the last Public Limited public companies

2008-2009 AGM Companies incorpo-Chairman Memberrated in India

Sri R. K. Agarwal 5 YES 2 – 1

Dr. Akkineni Nageswara Rao 5 NO 3 1 1

Sri A. K. Agarwal 5 YES 1 – 1

Sri Sanjeev Mitla 4 YES Nil 1 –

Sri. Ankit Jain 1 NO 2 – 1

Sri. K. Harishchandra Prasad 4 NO 8 1 1

None of the Directors on the Board is a Member of more than 10 Committees or Chairman ofmore than 5 Committees as specified in clause 49, across all the companies in which he is aDirector. The Directors have made necessary disclosures regarding Committee positions in otherCompanies as at March 31 2009.

The details of shares held by directors as on 31-03-2009 are given below:

Name of the Director Number of Shares

Sri R. K. Agarwal 1231086

Dr. Akkineni Nageswara Rao 1000

Sri Sanjeev Mitla 2500

Sri K. Harishchandra Prasad 2200

Sri. Ankit Jain 100

Sri A. K. Agarwal 1125600

3. AUDIT COMMITTEE:

a) Brief description of terms of reference

i] Oversight of Company's financial reporting process and disclosure of financial information.

ii] Recommending the appointment and removal of external auditor, fixation of audit fee and alsoapproval for payment for any other services.

iii] Review of financial statements before submission to Board.

iv] Review of adequacy of internal control systems and internal audit functions.

v] Review of Company's financial and risk management policies.

b) Composition, name of members and Chairman

1. Sri Sanjeev Mitla - Chairman, Non-Executive & Independent

2. Dr. A. Nageswara Rao - Member, Non-Executive & Independent

3. Sri. Ankit Jain - Member, Non-Executive & Independent

4. Sri K.Harishchandra Prasad - Member, Non-Executive & Independent

18


c) Meetings and attendance during the year

During the financial year March 31 2009, four Audit Committee Meetings were held on 30th June2008, 31st July 2008, 31st October 2008 and 31st January 2009.

Sl.No. Name No. of Meetings attended

1. Sri Sanjeev Mitla 3

2. Dr. A. Nageswara Rao 4

3. Sri. Ankit Jain 1

4. Sri K. Harishchandra Prasad 4

4. REMUNERATION COMMITTEE:

a) Brief description of terms of reference.

To formulate a remuneration policy and approve the remuneration or revision in the remunerationpayable to the whole-time Directors.

b) Composition, Name of Members:

i) Dr. Akkineni Nageswara Rao

ii) Sri. K. Harishchandra Prasad

iii) Sri. Sanjeev Mitla

c) Attendance during the year

No meeting of Remuneration Committee was held during the financial year 2008-09.

d) Remuneration Policy

To recommend/review the remuneration package, periodically to the Managing and Whole-timeDirectors. The remuneration policy is in consonance with the existing Industry Practice and alsowith the provisions of the Companies Act, 1956.

e) Details of remuneration paid during the year ended 31st March 2009 to the directors arefurnished hereunder:

Salary &Name Designation Commission Perquisites Sitting Fees Total

(Rs.) (Rs.) (Rs.) (Rs.)

Sri. R. K. Agarwal Managing Director 22,00,000 13,79,150 - 35,79,150

Sri A. K. Agarwal Executive Director 13,50,000 8,51,150 - 22,01,150

Dr. A. Nageswara Rao Non-ExecutiveDirector – – 44,000 44,000

Sri Sanjeev Mitla Non-ExecutiveDirector – – 13,500 13,500

Sri. Ankit Jain Non- ExecutiveDirector – – – –

Sri. K. Harishchandra Non-ExecutivePrasad Director – – 20,500 20,500


19

The Company does not have any stock option plan or performance linked incentive for theExecutive Directors. The appointments are made for a period of five years on the terms andconditions in the respective resolutions passed by the Members in the General Meetings, whichdo not provide for severance fees.

5. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE :

a) A Share Transfer and Shareholders' / Investors' Grievance Committee of Directors was constitutedto specifically look into the matters of investors' grievances such as Transfer, transmission, split andconsolidation of investors holding, Replacement of lost/mutilated/stolen share certificates,Dematerialization of shares, Non-receipt of dividends / notices / annual reports, change of addressesetc., The main object of the Committee is to strengthen the Investors' relations.

b) The Committee meets every fortnight and during the year 2008-09, 22 meetings were held.

c) The total number of complaints received and replied to the satisfaction of shareholders during theyear under review was 34. No requests for transfer is pending as on 31.03.2009.

d) The composition of the Committee and the details of meetings attended by its members are givenbelow:

Name CategoryNo. of meetings during

the year 2008-09

Held Attended

Dr. Akkineni Nageswara Rao, Independent, Non-Executive 22 21Chairman

Sri. R.K. Agarwal, Non- Independent, Executive 22 22Member

Sri. A.K. Agarwal, Non- Independent, Executive 22 22Member

e) Mrs. N. Madhavi, Company Secretary is the Compliance Officer of the Company.

6. GENERAL BODY MEETINGS:

Particulars of last three Annual General Meetings:

No. of specialAGM Year Location Date Time resolutions

passed

25th 2007-2008 Burgul Village, Farooqnagar Mandal, 20.09.2008 11.30 A.M. TwoMahabubnagar District.

24th 2006-2007 Burgul Village, Farooqnagar Mandal, 28.09.2007 12.30 P.M. OneMahabubnagar District.

23rd 2005- 2006 Burgul Village, Farooqnagar Mandal, 29.09.2006 2.00 P.M. SixMahabubnagar District.

For the year ended 31st March 2009, there have been no resolutions passed through postal ballot. Atthe ensuing Annual General Meeting, there is no resolution proposed to be passed through postal ballot.

20


7. DISCLOSURES:

a) Disclosures on materially significant related party transactions that may have potential conflict withthe interests of Company at large.

There are no materially significant related party transactions, which have potential conflict with theinterests of the Company at large.

b) Details of non-compliance by the Company, penalties, strictures imposed on the Company byStock Exchange or SEBI or any statutory authority, on any matter related to capital markets, duringthe last three years - Nil.

c) Whistle Blower Policy: The Company has not established a whistle blower policy. We furtheraffirm that during the year 2008-09, no person has been denied access to the audit committee.

d) The Company has fulfilled the following non-mandatory requirements as prescribed in AnnexureI D to clause 49 of the Listing Agreement with the Stock Exchanges:

i) The Company has set up a Remuneration Committee. Please see the para on RemunerationCommittee for details.

ii) Training of Board Members: The Company evolves a plan to train the Board members.

e) Secretarial Audit

A qualified practicing Company Secretary carried out a secretarial audit to reconcile the totaladmitted capital with National Securities Depository Limited (NSDL) and Central DepositoryServices (India) Limited (CDSL) and the total issued and listed capital. The secretarial audit reportconfirms that the total Paid-up capital is in agreement with the total number of shares in physicalform and the total number of dematerialized shares held with NSDL and CDSL.

8. MEANS OF COMMUNICATION:

The Quarterly and Half-yearly Results are intimated to the shareholders through press. Quarterlyresults are normally published in Financial Express and Andhra Prabha.

As required under clause 51 of the listing agreement, the company uploads the quarterly results,shareholding pattern and annual report on SEBI's website under Electronic Data Information Filing andRetrieval (EDIFAR).

There were no presentations made to the Institutional Investors or Analysts during the year 2008-2009.The Management Discussion and Analysis is forms part of this Annual Report.

9. GENERAL SHAREHOLDER INFORMATION:

a) Annual General Meeting

Date : 26th September 2009

Time : 11.30 a.m.

Venue : Registered Office, Burgul Village, Farooqnagar Mandal,Mahabubnagar District, Pin - 509 202 A.P.


21

b) Financial Calendar (tentative)

Results for quarter ending 30th June 2009 : Last week of July, 2009

Results for quarter ending 30th Sep, 2009 : Last week of Oct, 2009

Results for quarter ending 31st Dec, 2009 : Last week of Jan, 2010

Results for quarter /year ending 31st Mar, 2010 : Last week of April, 2010 (if Unaudited)or By Last week of June, 2010 (if Audited)

c) Dates of Book Closure

23rd September 2009 to 26th September 2009 (both days inclusive)

d) Dividend payment Date

No dividend recommended by the Board for the Year 2008-09.

e) Listing on Stock Exchanges

The Company's Shares are listed on the following Stock Exchanges:

Name of the Stock Exchange Address Code

The National Stock Exchange of Plot No. C/1, G Block, SURYAJYOTIIndia Limited Bandra-Kurla Complex, Bandra (E),

Mumbai - 400 051

The Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, 521022Dalal Street, MUMBAI - 400001

f) Stock Data

Monthly High and Low prices of Suryajyoti Spinning Mills Limited at National Stock Exchange (NSE)and the Bombay Stock Exchange Ltd. (BSE) for the year ended 31st March 2009 are furnishedhereunder:

MonthNSE BSE

HIGH (Rs.) LOW (Rs.) HIGH (Rs.) LOW (Rs.)

April, 2008 48.50 28.50 47.90 33.80

May, 2008 59.70 38.00 59.95 38.30

June, 2008 48.15 31.40 46.90 31.20

July, 2008 31.00 21.20 30.70 21.75

August, 2008 26.25 22.70 25.85 22.85

September, 2008 27.20 18.00 27.20 19.30

October, 2008 20.95 9.25 21.00 9.25

November, 2008 11.90 10.00 11.85 9.60

December, 2008 11.80 9.85 12.22 9.51

January, 2009 12.00 9.00 13.29 8.86

February, 2009 12.00 8.45 12.90 8.05

March, 2009 9.25 7.60 10.49 7.55

22


Performance of share price of the Company in comparison to the BSE Sensex:

g) Registrar & Transfer Agents

M/s. Sathguru Management Consultants Pvt. Ltd.,Plot No.15, Hindi Nagar, Behind Sai baba Temple,Punjagutta, Hyderabad - 500 034.Phone No(s) - 23356507, 23356975, 23350586,Fax No - 4004 0554

h) Share Transfer System

The share transfers are processed and the share certificates are returned to the shareholderswithin 30 days, subject to the documents being complete in all respects.

i) Distribution of shareholding as on 31st March 2009

Shareholding of

Nominal valueShareholders Shares

Number % Amount in Rs. %

1 - 5000 15973 95.08 22178620 13.75

5001 - 10000 436 2.60 3499910 2.17

10001 - 20000 165 0.98 2517480 1.56

20001 - 30000 71 0.42 1805190 1.12

30001 - 40000 33 0.20 1185720 0.73

40001 - 50000 29 0.17 1369530 0.85

50001 - 100000 26 0.15 1771940 1.10

100001 and above 67 0.40 126998160 78.72

TOTAL 16800 100.00 161326550 100.00


23

j] Shareholding Pattern as on 31st March 2009:

CategoryNo. of Percentage of

shares held shareholding

Promoters Holdings 6315744 39.15

Foreign Institutional Investors 275000 1.71

Corporate Bodies 2792130 17.31

Insurance Companies 637500 3.95

Indian Public 4788826 29.68

NRIs & Foreign National 1323455 8.20

TOTAL 16132655 100.00

k] Dematerialisation of shares and liquidity

The Company's shares are available for dematerialisation on both the Depositories i.e., NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).Equity shares of the Company representing 78.09% of the Company's share capital have beendematerialized as on 31.03.2009.

The Company's shares are regularly traded on The National Stock Exchange of India Limited andthe Bombay Stock Exchange Limited, in electronic form.

Under the Depository System, the International Securities Identification Number (ISIN) allotted tothe Company's shares is INE411C01017.

(i) Address of Registrars for Dematerialisation of Shares/transfer, change of address of members:

M/s. Sathguru Management Consultants Pvt. Ltd.,Plot No.15, Hindi Nagar, Behind Saibaba Temple,Punjagutta, Hyderabad - 500 034.Phone No(s) - 23356507, 23356975, 23350586,Fax No - 4004 0554

(ii) Any queries relating to Dividends, Annual Reports etc.The Company Secretary,Suryajyoti Spinning Mills Ltd.Surya Towers, 7th Floor, 105, Sardar Patel Road,Secunderabad - 500 003.Ph: 040 - 27810086/27814265E-mail:[email protected]

l] Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date andlikely impact on equity.

The Company did not have any outstanding GDRs/ADRs/Warrants. During the year 2006-07, theCompany had raised USD 10 mn. through 2% Foreign Currency Convertible Bonds (FCCBs) topart-finance the ongoing expansions, modernisation and new projects. The FCCBs got listed onthe Singapore Exchange Securities Trading Ltd. The FCCBs will have a maturity of five years andone day i.e., due on February 17, 2012 and will be convertible into equity shares of the Companyat an initial conversion price of Rs.85/- per share. The underlying equity shares on conversion willbe listed on The Bombay Stock Exchange Ltd., and National Stock Exchange of India Ltd.

24


n) Address for correspondence:

The Company SecretarySuryajyoti Spinning Mills Ltd.Surya Towers, 7th Floor,105, Sardar Patel Road,Secunderabad - 500 003.Ph: 040 - 27810086/27814265Fax:040-27846837E-mail: [email protected]

m] Plant Locations

MakthalNarayanpet Road,

Makthal

Mahabubnagar District

Andhra Pradesh

Burgul Village,Farooqnagar Mandal,

Mahabubnagar District.

Andhra Pradesh

Rajapur VillageBalanagar Mandal,


Andhra Pradesh

Kucherkal VillageBalanagar Mandal,


Andhra Pradesh

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS ANDSENIOR MANAGEMENT PERSONNEL WITH THE COMPANY'S

CODE OF CONDUCT

This is to confirm that the Company has adopted a Code of Conduct for the Board of Directors and senior

management personnel of the Company. The code is available on the company's website.

I hereby declare that all the board members and senior management personnel have affirmed compliance

with the code of conduct adopted by the company and have submitted declarations in this behalf for the year

ended 31st March 2009.

Place : Secunderabad R. K. AgarwalDate : 27th June, 2009 Managing Director


25

AUDITORS CERTIFICATE ON COMPLIANCE OF CORPORATE GOVERNANCE

To the members ofSURYAJYOTI SPINNING MILLS LIMITED,SECUNDERABAD. A.P.

We have examined the compliance of conditions of Corporate Governance by SURYAJYOTI SPINNINGMILLS LIMITED, SECUNDERABAD, A.P. for the year ended on 31st March, 2009, as stipulated in Clause 49of the Listing Agreement of the said Company with stock exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Ourexamination has been limited to a review of the procedures and implementation thereof adopted by theCompany for ensuring compliance with the conditions of the Corporate Governance as stipulated in the saidClause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and basedon the representations made by the Directors and the Management, we certify that the Company hascomplied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentionedListing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company norof the efficiency or effectiveness with which the management has conducted the affairs of the company.

for Brahmayya & Co.,Chartered Accountants

Place : Hyderabad K. S. RaoDate : 27th June, 2009 Partner

Membership No.15850

26


AUDITORS' REPORTToThe Members ofSURYAJYOTI SPINNING MILLS LIMITEDSECUNDERABAD.

We have audited the attached Balance Sheet ofSURYAJYOTI SPINNING MILLS LIMITED,SECUNDERABAD. (A.P.) as at 31st March, 2009and also the Profit and Loss Account and the CashFlow Statement for the year ended on that dateannexed thereto. These financial statements are theresponsibility of the Company's Management. Ourresponsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with auditingstandards generally accepted in India. ThoseStandards require that we plan and perform theaudit to obtain reasonable assurance about whetherthe financial statements are free of materialmisstatement. An audit includes examining, on a testbasis, evidence supporting the amounts anddisclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as wellas evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

We report as follows :

1. As required by the Companies (Auditors'Report) Order, 2003, issued by theGovernment of India in terms of sub-section(4A) of Section 227 of the Companies Act,1956, we enclose in the Annexure a statementon the matters specified in paragraphs 4 and 5of the said Order.

Further to our comments in the Annexurereferred to above, we report that :

2 i) We have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary forthe purposes of our audit.

ii) In our opinion, proper books of accountsas required by law have been kept bythe Company so far as appears from ourexamination of those books.

iii) The Balance Sheet, Profit and LossAccount and Cash Flow Statement dealtwith by this report are in agreement withthe books of account;

iv) In our opinion, the Balance Sheet, Profitand Loss account and Cash FlowStatement dealt with by this reportcomply with the accounting standardsreferred to in sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of the written representationsreceived from the directors, as on 31stMarch, 2009 and taken on record by theBoard of Directors, we report that, noneof the directors is disqualified as on 31stMarch, 2009 from being appointed as aDirector in terms of clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956;

vi) In our opinion and to the best of ourinformation and according to theexplanations given to us, the said accountsread in conjunction with the Schedulesannexed therewith give the informationrequired by the Companies Act, 1956, inthe manner so required and give a trueand fair view in conformity with theaccounting principles generally acceptedin India :

a) in the case of the Balance Sheet, ofthe state of affairs of the Companyas at 31st March, 2009;

b) in the case of the Profit and Lossaccount, of the Profit of theCompany for the year ended onthat date and;

c) in the case of Cash Flow Statement,of the cash flows for the year endedon that date.

For Brahmayya & Co.,Chartered Accountants

Place : Hyderabad K.S. RaoDate : 27.06.2009 Partner

Membership No.15850


27

RE: SURYAJYOTI SPINNINGMILLS LIMITED, SECUNDERABADAnnexure referred to in paragraph 1 of our reportof even date,

1. a) The Company has maintained properrecords showing full particulars, includingquantitative details and situation of fixedassets.

b) As explained to us, the management hasphysically verified the fixed assets duringthe year and there is a regularprogramme of verification which, in ouropinion, is reasonable having regard tothe size of the company and the natureof the assets. No material discrepancieswere noticed on such verification.

c) The plant and machinery disposed offduring the year by the company is notsubstantial and hence, it has not affectedthe going concern status of the Company.

2. a) The Inventory has been physically verifiedduring the year by the Management. Inour opinion, the frequency of verificationis reasonable.

b) In our opinion, the procedures of physicalverification of inventories followed by themanagement are reasonable and adequatein relation to the size of the companyand the nature of its business.

c) The Company is maintaining properrecords of inventory. The discrepanciesnoticed on physical verification betweenthe physical stocks and book recordswere not material.

3. a) The company has granted one unsecuredloan to the company covered in theregister maintained under Section 301 ofthe Companies Act, 1956, and themaximum amount involved during theyear was Rs.10 lakhs.

b) The rate of interest and other terms andconditions of unsecured loan given by theCompany are not prima facie prejudicialto the interest of the Company.

c) The receipt of the principal amount andinterest are regular.

d) In view of our comment in paragraph 3(c)above, 3(d) of the aforesaid Order is notapplicable to the Company.

e) The company has not taken any loansfrom companies, firms or other partiescovered in the register maintained underSection 301 of the Companies Act, 1956.

f) In view of our comment in paragraph 3(e)above 3(f) and (g) of the aforesaid Orderare not applicable to the Company.

4. a) In our opinion and according to theinformation and explanations given to us,there are adequate internal controlsystems commensurate with the size ofthe Company and the nature of itsbusiness with regard to purchase ofinventory and fixed assets and with regardto sale of goods and services.

5. a) In our opinion and according to theinformation and explanations given to us,we are of the opinion that the particularsof contracts or arrangements referred toin section 301 of the Companies Act,1956 have been entered in the registerto be maintained under that section.

b) In our opinion and according to theinformation and explanations given to us,the transactions made in pursuance ofcontracts or arrangements entered in theregister maintained under Section 301 ofthe Companies Act, 1956 have beenmade at prices which are reasonablehaving regard to prevailing market pricesat the relevant time.

6. The Company has not accepted any depositsfrom the public. Hence, the provisions ofSection 58A, 58AA and other relevantprovisions of the Companies Act, 1956 andthe Companies (Acceptance of Deposits) Rules,1975 are not applicable.

7. In our opinion, the Company has an internalaudit system commensurate with its size andnature of its business.

28


8. We have broadly reviewed the books ofaccount relating to materials, labour and otheritems of cost maintained by the companypursuant to the Rules made by the CentralGovernment for the maintenance of costrecords under section 209(1)(d) of theCompanies Act, 1956 in respect of yarn andare of the opinion that prima facie theprescribed accounts and records have beenmade and maintained.

9. a) According to the records of the Company,the Company is regular in depositing withappropriate authorities undisputedstatutory dues including provident fund,investor education and protection fund,employees' state insurance, income tax,sales tax, wealth tax, service tax, customsduty, excise duty, cess and other materialstatutory dues applicable to it.

b) According to the information andexplanations given to us, no undisputedamounts payable in respect of income tax,wealth tax, service tax, sales tax, customsduty, excise duty and cess were in arrears,as at 31st March, 2009 for a period ofmore than six months from the date theybecame payable.

10. The Company has no accumulated losses atthe end of the financial year. The Companyhas not incurred any cash losses during thefinancial year covered by our audit and theimmediately preceding financial year.

11. In our opinion and according to the informationand explanations given to us, the Companyhas not defaulted in repayment of dues to anyfinancial institutions and banks.

12. The Company has not granted any loans andadvances on the basis of security by way ofpledge of shares, debentures and othersecurities.

13. The Company is not a chit fund or a nidhi/mutual benefit fund / society and thereforethe requirements relating to such companiesare not applicable to the Company.

14. The Company is not dealing or trading inshares, securities, debentures and otherinvestments.

15. According to the information and explanationsgiven to us, the company has not given anyguarantee for loans taken by others from banksor financial institutions.

16. In our opinion, and according to the informationand explanations given to us the term loanswere applied for the purpose for which theloans were obtained.

17. In our opinion, and according to the informationand explanations given to us the funds raisedon short-term basis have not been used forlong-term investment.

18. During the year, the Company has issued13,00,200 Equity Shares of Rs.10/- each at apremium of Rs.40/- to non-promoters and7,00,000 Equity Shares at Rs.10/- each at apremium of Rs.6/- to promoters. In ouropinion, the price at which the shares havebeen issued is not prejudicial to the interest ofthe Company.

19. During the year, the Company has not issuedany debentures and therefore the question ofcreating security in respect thereof does notarise.

20. During the year, the Company has not raisedany money by public issue.

21. Based upon the audit procedures performedand according to the information andexplanations given to us, we report that nofraud on or by the Company has been noticedor reported during the year.

For Brahmayya & Co.,Chartered Accountants

Place : Hyderabad K.S. RaoDate : 27.06.2009 Partner

Membership No.15850


29

BALANCE SHEET AS AT 31st MARCH, 2009Schedule As at As atReference 31.03.2009 31.03.2008

Rs. Rs. Rs. Rs.

SOURCES OF FUNDSShareholders' FundsShare Capital 1 16,14,86,175 14,14,84,175Reserves & Surplus 2 51,09,58,010 45,80,73,479

67,24,44,185 59,95,57,654Loan FundsSecured Loans 3 1,69,31,93,706 1,25,33,03,572Unsecured Loans 4 58,32,21,282 2,27,64,14,988 59,99,18,897 1,85,32,22,469Deferred Tax Liability 7,86,45,726 6,64,87,551

TOTAL 3,02,75,04,899 2,51,92,67,674

APPLICATION OF FUNDSFixed Assets 5Gross Block 1,74,11,80,763 1,70,50,13,428Less: Depreciation 52,14,49,659 44,30,26,847

Net Block 1,21,97,31,104 1,26,19,86,581Add: Capital Works-in-Progress 1,21,41,67,942 27,32,38,156Add: Un allocated

Capital Expenditure 6 12,56,58,099 2,55,95,57,145 – 1,53,52,24,737Investments 7 2,31,500 7,31,500Current Assets, Loans& AdvancesInventories 8 24,09,41,897 25,38,77,207Sundry Debtors 9 26,74,98,313 27,98,75,700Cash & Bank Balances 10 10,54,93,773 22,39,07,154Loans & Advances 11 30,93,92,535 44,63,65,427

92,33,26,518 120,40,25,488Less: Current Liabilities

& Provisions 12 45,56,10,264 22,19,64,261Net Current Assets 46,77,16,254 98,20,61,227Miscellaneous Expenditure 13 – 12,50,210

TOTAL 3,02,75,04,899 2,51,92,67,674

Notes on Accounts 21Accounting Policies 22

The Schedules referred to above form an integral part of the Balance Sheet.

Per our report of even Date For and on behalf of the Boardfor Brahmayya & Co.,Chartered Accountants

K S Rao R K Agarwal A K AgarwalPartner Managing Director Executive Director

Place : Hyderabad M Bala Guravaiah N MadhaviDate : 27.06.2009 Vice President (Finance) Company Secretary

30


PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2009Schedule Year Ended Year EndedReference 31.03.2009 31.03.2008

Rs. Rs.

INCOMESales (Net of Discounts) 2,09,52,75,946 2,04,68,53,851Less Excise duty 43,777 59,850Net Sales 2,09,52,32,169 2,04,67,94,001Other Income 14 1,60,29,312 4,32,90,041

TOTAL 2,11,12,61,481 2,09,00,84,042

EXPENDITURERaw Materials Consumed 15 1,28,04,62,066 1,26,35,41,438Purchase of Traded goods 10,25,30,764 5,57,44,627Processing / Conversion Charges 2,02,11,745 1,99,99,388Stores Consumed 16 7,94,92,420 8,07,47,908Power & Fuel 16,30,40,776 16,21,41,093Payment & Benefits to Employees 17 11,31,00,568 10,45,82,358Other Expenses 18 16,77,32,292 14,70,82,150Finance Charges 19 9,09,69,691 7,75,56,399Managerial Remuneration 57,80,300 48,71,000Depreciation 5 8,09,88,729 7,63,87,931Miscellaneous Expenses Written Off 12,50,210 12,50,214(Increase) / Decrease in Stocks 20 (4,32,73,786) (93,36,152)

TOTAL 2,06,22,85,775 1,98,45,68,354

Profit for the Year 4,89,75,706 10,55,15,688Less: Provision for Income Tax : For the year 97,00,000 1,18,00,000

MAT Credit Entitlement (38,35,000) –Fringe Benefit Tax 9,00,000 8,50,000Deferred Tax Liability 1,21,58,175 1,51,45,430

Profit After Tax 3,00,52,531 7,77,20,258Profit brought forward from last year 23,05,62,496 18,27,62,797

Amount available for Appropriation 26,06,15,027 26,04,83,055APPROPRIATIONProposed Dividend – 84,79,473Dividend Tax – 14,41,086Transferred to General Reserve – 2,00,00,000Surplus Carried to Balance Sheet 26,06,15,027 23,05,62,496

TOTAL 26,06,15,027 26,04,83,055

Earning Per Share (Face Value : Rs.10/-) (See Note No.25)Basic 2.04 5.50Diluted 2.04 5.50

Notes on Accounts 21Accounting Policies 22

The Schedules referred to above form an integral part of the Profit & Loss Account.





31

SCHEDULES FORMING PART OF THE ACCOUNTS

AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

SCHEDULE 1SHARE CAPITAL

Authorised:

2,50,00,000 Equity shares of Rs 10/- each 25,00,00,000 25,00,00,000

Issued Capital:

1,64,02,700 (Previous Year, 1,44,02,500)Equity Shares of Rs 10/- each 16,40,27,000 14,40,25,000

Subscribed and paid-up:

1,61,32,655 (Previous Year 1,41,32,455)Equity Shares of Rs 10/- each 16,13,26,550 14,13,24,550

Add :- Forfeited Shares (Amount Originally Paid Up) 1,59,625 1,59,625

TOTAL 16,14,86,175 14,14,84,175

SCHEDULE 2RESERVES AND SURPLUS

As at Additions Deductions As at As at01.04.2008 during the during the 31.03.2009 31.03.2008

Year YearRs. Rs. Rs. Rs. Rs.

Reserves & Surplus

State Subsidy 15,00,000 15,00,000 15,00,000

Securities Premium 11,54,71,295 5,62,08,000 17,16,79,295 11,54,71,295

Capital Reserves 17,50,000 17,50,000 17,50,000

General Reserve 10,87,89,688 – 3,33,76,000 7,54,13,688 10,87,89,688

Surplus - Balance inProfit and Loss A/c 23,05,62,496 26,06,15,027 23,05,62,496 26,06,15,027 23,05,62,496

TOTAL 45,80,73,479 31,68,23,027 26,39,38,496 51,09,58,010 45,80,73,479

32



AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

SCHEDULE 3SECURED LOANSA. TERM LOANS

1) Rupee Term Loans from:

a) Industrial Development Bank of India 10,52,81,120 9,85,81,120

b) Axis Bank Ltd., – 1,61,78,640

c) State Bank of India 85,03,48,880 68,71,90,259

d) State Bank of Hyderabad 25,96,15,566 9,84,85,444

2) Foreign Currency Loans from:

a) State Bank of India 16,89,758 67,66,875

3) Buyer's Credit from

a) SBI Chicago 7,11,74,460 7,11,74,460

B. WORKING CAPITAL LOANCash Credit from

State Bank of India 29,79,61,852 24,12,25,481

Axis Bank Ltd., 4,17,48,612 3,04,82,777

Industrial Development Bank of India 5,81,23,751 –

C. VEHICLE HIRE PURCHASE LOANS 72,49,707 32,18,516

TOTAL 1,69,31,93,706 1,25,33,03,572

NOTES: 1. The Loans referred in A above are secured by mortgage of present and future moveable and immovable

assets of the company on pari-passu basis and guaranteed by two Directors of the Company.

2. Working Capital Loan referred in B above is secured by hypothecation of raw materials, yarn, stock-in-

process,stores & spares and sundry debtors and by a second charge on present and future immovable

properties of the company on pari-passu basis and further guaranteed by two Directors of the Company.

3. Hire purchase loans referred to in C above are secured by hypothecation of the respective assets and

guranteed by one of the Directors of the Company.

SCHEDULE 4UNSECURED LOANS

From IDBI – 5,00,00,000

Sales Tax Deferment 14,23,21,282 14,89,18,897

Foreign Currency Convertible Bonds 44,09,00,000 40,10,00,000

TOTAL 58,32,21,282 59,99,18,897


33

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34


STATEMENT OF EXPENDITURE INCURRED DURING CONSTRUCTIONPERIOD (PENDING ALLOCATION)

AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

Schedule 6Raw Materials

Opening Stock –Purchased 3,51,42,274Total 3,51,42,274Less :- Closing Stock 1,38,42,093 2,13,00,181 –

Power & Fuel

Electricity Charges 1,37,93,278Fuel Charges 33,98,021 1,71,91,299 –

Stores Consumed 4,62,16,643 –

Payment & Benefits To Employees

Salaries & Wages 2,17,98,146Welfare Expenses 20,45,061 2,38,43,207 –

Other Expenses

Office Maintenance 6,42,534Miscellaneous Expenses 9,70,048Printing & Stationery 1,11,198Rates & Taxes 10,11,667Stamp Duty 2,00,000Legal & Professional Charges 3,32,50,581Rent 2,38,990Staff Recruitment Expenses 11,83,203Telephone & Truncalls 5,74,423Vehicle Maintenance 9,84,559Donations 27,038Business Promotion 1,51,710Postage 2,38,211Insurance 3,81,165Lease Rentals 1,69,002Advertisement 2,50,000Testing Charges 4,26,215Forwarding Charges 5,01,551Repairs to other Assets 1,39,257Paddy Husk Consumed 7,19,916Travelling Expneses 58,72,313Security Wages 17,06,079 4,97,49,660 –

Finance Charges

Bank Charges 21,09,564 21,09,564 –

16,04,10,553 –

Less:- Income

Sales 3,46,35,840Interest Earned 1,05,000Job Work Charges 11,615 3,47,52,455 –

12,56,58,099 –Transferred to Projects Works-in-progress 12,56,58,099 –

– –


35


AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

SCHEDULE 7INVESTMENTS NO.OF FACE(at cost-non-trade-unquoted) SHARES VALUE

(Rs)

National Savings Certificate 5,500 5,500

100 IDBI Flexi Bonds-12, of Rs.5000/- each – 5,00,000

40 IDBI Flexi Bonds-14, of Rs.5000/- each 2,00,000 2,00,000

Regent Clothing (P) Ltd., 2600 10 26,000 26,000

TOTAL 2,31,500 7,31,500

SCHEDULE 8INVENTORIES(Valued and Certified by the Management/at cost unless otherwise stated)

Rawmaterials 9,84,08,195 16,75,63,391

Stores & spares 3,53,16,478 2,23,70,378

Yarn 2,97,38,569 3,92,76,497

Fabric 1,58,06,180 –

Stock-in-process 6,12,00,419 2,40,72,955

Waste 4,72,056 5,93,986

TOTAL 24,09,41,897 25,38,77,207

SCHEDULE 9SUNDRY DEBTORS(Unsecured Considered good)

Due over six months 1,08,04,641 1,27,51,209

Others 25,66,93,672 26,71,24,491

TOTAL 26,74,98,313 27,98,75,700

36



AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

SCHEDULE 10CASH AND BANK BALANCES

Cash on Hand 13,96,749 7,37,026

With Scheduled Banks

in Current Accounts 4,20,58,337 3,65,70,728

Margin Money Deposits with State Bank Of India 6,20,38,687 18,65,99,400

(Pledged with the bank towards L.C's Issued )

TOTAL 10,54,93,773 22,39,07,154

SCHEDULE 11LOANS AND ADVANCES(Unsecured considered good, recoverablein cash or in kind or for value to be received)

Loans to Bodies Corporate 10,00,000 10,00,000

Advances for : Capital Works 1,91,78,696 18,68,29,815

: Rawmaterials and Stores 6,92,40,209 3,89,64,506

: Others 1,34,86,885 1,42,34,094

Staff Advances 32,95,737 30,87,118

Modvat benefit entitlement 2,46,20,562 2,48,91,472

Deposits / Other recoverable 4,41,09,785 4,10,47,063

Prepaid Expenses 38,33,042 44,88,814

Export Incentives Receivable 1,76,60,528 4,73,80,244

Accrued Interest 23,98,736 10,34,795

Claims Receivable 4,51,65,035 4,13,31,994

Advance Income Tax 5,19,27,633 4,11,05,720

MAT Credit Entitlement 38,35,000 –

Terminal Excise Duty Recble-EPCG 96,40,687 9,69,792

TOTAL 30,93,92,535 44,63,65,427


37


AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

SCHEDULE 12CURRENT LIABILITIES AND PROVISIONS

A. Current liabilities:

Creditors for rawmaterials and Stores

- Due to Micro, Small and Medium Enterprises 8,58,973 17,42,706

- Others 11,81,83,182 7,53,72,206

Creditors for : Capital Goods 14,93,18,739 2,94,72,067

: Expenses 4,56,82,286 3,55,10,023

Other Creditors 6,92,95,525 45,83,306

Advances Recieved Against Sales 1,45,59,699 1,73,37,358

Interest Accrued but not due 24,84,309 52,870

Unclaimed Dividends * 26,12,551 21,23,166

TOTAL (A) 40,29,95,264 16,61,93,702

B. Provisions For :

Income Tax 5,26,15,000 4,58,50,000

Proposed Dividend – 84,79,473

Dividend Tax – 14,41,086

TOTAL (B) 5,26,15,000 5,57,70,559

TOTAL (A+B) 45,56,10,264 22,19,64,261

* There is no Amount due and Outstanding to be credited to Investors Education & Protection Fund.

SCHEDULE 13MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

DEFERRED REVENUE EXPENDITURE 12,50,210 2500424

Add:- Additions – –

12,50,210 25,00,424

Less: Written Off 12,50,210 12,50,214

TOTAL – 12,50,210

38


SCHEDULES FORMING PART OF THE ACCOUNTSCurrent Year Previous Year

31.03.2009 31.03.2008Rs. Rs.

SCHEDULE 14OTHER INCOME

Interest earned

(TDS Rs.29,29,147/- Previous Year Rs.12,66,303/-) 1,33,53,873 1,46,49,631

Miscellaneous Income 24,79,251 3,92,690

Scrap Sales 1,25,680 1,65,142

Profit on Sale of RM 70,508 73,331

Exchange Variance (Net) – 2,80,09,247

TOTAL 1,60,29,312 4,32,90,041

SCHEDULE 15RAW MATERIALS CONSUMED

Openig Stocks 16,75,63,391 12,64,91,367

Add: Purchases 1,21,82,87,313 1,30,57,24,148

1,38,58,50,704 1,43,22,15,515

Less : Closing Stocks 9,84,08,195 16,75,63,391: Cost of Raw Materials Sold 69,80,443 10,53,88,638 11,10,686 16,86,74,077

TOTAL 1,28,04,62,066 1,26,35,41,438

SCHEDULE 16STORES CONSUMED

Consumable Stores 4,19,86,976 4,69,16,494

Packing Material Consumed 3,75,05,444 3,38,31,414

TOTAL 7,94,92,420 8,07,47,908

SCHEDULE 17PAYMENTS ANDBENEFITS TO EMPLOYEES

Salaries & Wages 9,51,72,150 8,82,31,641Welfare expenses 73,41,366 66,38,394Contribution to ESI and PF 57,71,296 52,76,139Gratuity 4,82,851 14,74,595Bonus 43,32,905 29,61,589

TOTAL 11,31,00,568 10,45,82,358


39

SCHEDULES FORMING PART OF THE ACCOUNTSCurrent Year Previous Year

31.03.2009 31.03.2008Rs. Rs.

SCHEDULE 18OTHER EXPENSESOffice Rent 5,08,800 76,800Security Service Charges 12,04,164 11,43,292Rates & Taxes 2,96,56,691 3,35,33,551Printing and Stationery 17,50,747 18,87,206Postage Telegrams & Telephones 27,72,951 27,19,516Travelling & Conveyance 41,39,287 35,07,739Directors sitting fees 78,000 81,000Commission on sales 2,66,39,364 2,32,93,786Expenses on sales 6,47,53,537 6,48,23,879Insurance 43,34,087 43,55,893Advertisement 96,415 1,61,369Auditors remuneration 1,48,390 115,283Cost Auditors Fee 27,575 28,090Legal & Professional Charges 11,37,652 14,53,854Repairs to -Buildings 5,02,582 1,37,544

-Machinery 41,46,042 16,33,373-Other Assets 16,15,193 6,81,419

Vehicle Maintenance 30,79,146 28,38,047Miscellaneous Expenses 66,70,020 42,06,228Donations 34,826 1,19,379Loss on Sale of Assets 718,820 2,84,902Exchange Variance (Net) 1,37,18,003 –

TOTAL 16,77,32,292 14,70,82,150

SCHEDULE 19FINANCE CHARGESInterest on Term Loans 3,75,17,615 3,70,04,531

Interest on Others 5,34,52,076 4,05,51,868

9,09,69,691 7,75,56,399SCHEDULE 20A) Opening Stocks:

Yarn 3,92,76,497 2,91,74,215Waste 5,93,986 1,57,118Stock-in-process 2,40,72,955 2,52,75,953

6,39,43,438 5,46,07,286

B) Closing Stocks:Yarn 2,97,38,569 3,92,76,497Fabric 1,58,06,180 –Waste 4,72,056 5,93,986Stock-in-process 6,12,00,419 2,40,72,955

10,72,17,224 6,39,43,438

C) (Increase)/Decrease in Stocks (A-B) (4,32,73,786) (93,36,152)

40


SCHEDULES FORMING PARTS OF THE ACCOUNTSSchedule - 21

Notes forming part of the Balance Sheet as at 31st March, 2009 and Profit & Loss account for the year ended on that date

2008-2009 2007-2008Rs. Rs.

1. A) Contingent Liabilities not provided for inrespect of

a) Letters of Credit 3,64,00,000 36,19,94,277

b) APSEB Liability under dispute not provided for 12,78,141 12,78,141

c) Against derivative transaction entered by the company – 12,49,99,366

with Europion knock out.

B) Estimated amount of contracts remaining to be Executed 66,60,000 6,59,83,194

on Capital Account and not provided for

2. A) Due to Micro, Small and Medium Enterprises :-

Name of the Supplier Amount (Rs.) Name of the Supplier Amount (Rs.)

1) Lakshmi Woven Sacks 2,60,291 4) S.S. Packaging 195

2) Mohana Krishna Polymers 21,892 5) SPP Poly Packs 5,02,932

3) Suneetha Paper Board & Pulp Board 71,512 6) Srinivsa Poly Films 2,151

B) Interest Payable to Micro, Small and Medium Enterprises:- NIL

3. Additional Information:

a) Licenced/Registered Capacity

i) No. of Spindles 90,776 90,776

b) Installed Capacity

(No.of Spindles) 86,560 86,560

(The Figures for installed capacity have been

certified by the Management and not verified

by auditors being a technical matter)

Yarn Division :-c) Production & Sales

i) Production of Yarn Kgs. Rs. Kgs. Rs.

a) Own 16102811 16978648

b) Others 710121 781093

ii) Sales Returns – 14070

iii) Sales

Yarn (Net of Discounts) 16557217 1,85,01,96,509 17659918 1,86,92,31,349

Samples,Waste, Process Loss etc. 1449 – 4697 –

Waste 2544085 7,35,93,003 2506896 5,55,30,949

Export Incentives 5,82,79,378 6,41,07,524

Total 1,98,20,68,890 1,98,88,69,822

iv) Captive Consumption

Yarn 352555 –

Waste 81468 –

Process Stock 21082 –


41

SCHEDULES FORMING PARTS OF THE ACCOUNTSSchedule - 21 (Contd.)

2008-2009 2007-2008Kgs. Rs. Kgs. Rs.

d) Particulars of Traded Goods :

YarnOpening Stock 9562 10,83,903 9562 10,83,903

Purchases 870537 13,07,81,253 485662 5,58,17,494

Closing Stock – – 9562 10,83,903

SalesYarn 879126 11,32,07,056 485662 5,79,84,029

Process Loss 973 – – –

4. Opening & Closing Stocksa) Opening Stocks

Yarn 391529 282333

Waste 82200 35860

Total 473729 318193

b) Closing Stocks

Yarn 293240 391529

Waste 61233 82200

Total 354473 473729

5. Stocks of Raw Materials

Yarna) Opening Stocks

i) Cotton 2245850 2089665

ii) Polyster Staple Fibre 400847 80356

iii) Viscose Staple Fibre 145712 71892

iv) Cylinder Fly 38409 56289

Total 2830818 2298202

b) Purchase

i) Cotton 6684884 42,60,44,124 8562336 48,07,60,768

ii) Polyster Staple Fibre 10377073 67,43,56,770 11398686 71,85,14,388

iii) Viscose Staple Fibre 863375 9,15,43,965 881460 9,70,37,223

iv) Cylinder Fly 294530 1,25,00,360 246836 94,11,769

Total 18219862 1,20,44,45,219 21089318 1,30,57,24,148

c) Closing Stocks

i) Cotton 327399 2245850

ii) Polyster Staple Fibre 809198 400847

iii) Viscose Staple Fibre 179397 145712

iv) Cylinder Fly 29650 38409

Total 1345644 2830818

42



2008-2009 2007-2008

Kgs. Rs. Kgs. Rs.

6. Raw Materials Consumed

i) Cotton 8603335 53,14,26,547 8400881 46,79,25,556

ii) Polyster Staple Fibre 9930591 65,01,73,430 11065347 69,74,78,579

iii) Viscose Staple Fibre 791185 8,61,20,718 807641 8,83,74,587

iv) Cylinder Fly 303289 1,27,41,371 264716 97,62,716

Total 19628400 1,28,04,62,066 20538585 1,26,35,41,438

7. Cost of rawmaterial sold

i) Cotton – – 5270 2,97,242

ii) Polyster Staple Fibre 38131 28,13,068 12848 8,13,444

iii) Viscose Staple Fibre 38505 41,67,375 – –

Total 76636 69,80,443 18118 11,10,686

8. Percentage of Raw Materials Consumed

Indigenous 95.83% 1,22,70,29,919 100.00% 1,26,35,41,438

Imported 4.17% 5,34,32,147 0.00% –

Total 100% 1,28,04,62,066 100% 1,26,35,41,438

9. Percentage of Spare Parts & Components Consumed

Indigenous 97.83% 4,40,11,142 96.99% 4,55,03,785

Imported 2.17% 9,75,834 3.01% 14,12,709

100% 4,49,86,976 100% 4,69,16,494

10. Bottom Weight Fabric Project

a) Closing Stocks

Raw Material

Yarn - Kgs 1,14,440 –

Grey Fabric - Mtrs 18,000 –

Finished Goods - Fabric - Mtrs 2,34,172 –

11. Auditors Remuneration

Audit Fee 93,240 56,180

Tax Audit Fee 27,575 16,854

Certification Fee 27,575 28,090

Tax Representation Fee – 14,159

Total 1,48,390 1,15,283

12. Value of Imports (CIF BASIS)

a) Rawmaterials 5,30,10,861 –

b) Stores & Spares 43,39,896 14,12,709

c) Plant & Machinery 1,99,43,309 13,01,24,181


43


2008-2009 2007-2008Rs. Rs

13. Expenditure in Foreign Currency during the year on Account of

a) Commission on Exports 1,64,78,482 1,61,70,104

b) Foreign Travel 16,49,768 6,07,984

c) Interest Payments 1,13,03,051 1,02,25,170

d) Repayment of Loans 60,89,682 54,96,694

e) Consultancy Services 47,66,742 39,96,437

14. Earnings in Foreign Exchange

FOB Value of Exports 78,79,60,467 77,72,34,744

Interest Receipts - FD with SBI London – 90,98,484

15. Managerial Remuneration

a) Managing Director

i) Salary 22,00,000 18,00,000

ii) Perquisites

H.R.A 11,00,000 9,00,000

Subscription to Clubs 15,150 5,500

iii) Contribution to Provident Fund 2,64,000 2,16,000

35,79,150 29,21,500

b) Executive Director

i) Salary 13,50,000 12,00,000

ii) Perquisites

H.R.A 6,75,000 6,00,000

Subscription to Clubs 14,150 5,500

iii) Contribution to Provident Fund 1,62,000 1,44,000

22,01,150 19,49,500

GRAND TOTAL 57,80,300 48,71,000

16. Employee Benefit Plans

Effective from 01.04.2007 the company had adopted the revised AS 15- Employee Benefits.

17. The Company has raised an amount of Rs 762.10 lakhs by way of issue of 13,00,200 equity shares ofRs.10/- each at a price of Rs.30/- per share to non-promoters and 7,00,000 equity shares of Rs.10/- eachat a price of Rs.16/- per share to augment Long term resources of the company, for general Corporatepurpose including Long term working capital requirements. The amount was utilised for the new unitset up at Kucherkal village, Mahaboonagar Dist.

44


SCHEDULES FORMING PARTS OF THE ACCOUNTSSchedule - 21 (Contd.)18. The company had availed interest free Sales Tax Deferment Loan from Government of Andhra Pradesh

on Makthal unit, Burgul Original and availing on Burgul Expansion Scheme. The Sales Tax Deferment loanshown under Unsecured Loans under Schedule 4 indicates sales tax collected under deferral scheme andis payable at the end of 10th year in respect of Makthal and Burgul original and is payable at the endof 14th year in respect of Burgul expansion.

Interest free Sales tax loan from Andhra Pradesh State Government amounting to Rs.14,23,21,282/- isrepayable as under :

Year of Payment Makthal - Original Burgul - Original Burgul - Expansion TOTAL

2009-2010 29,21,042 61,00,165 90,21,2072010-2011 40,11,037 1,12,18,928 1,52,29,9652011-2012 1,02,29,769 1,02,29,7692012-2013 1,01,74,244 1,01,74,2442013-2014 3,34,419 7,48,800 10,83,2192014-2015 5,07,754 58,79,204 63,86,9582015-2016 69,58,963 69,58,9632016-2017 1,20,51,714 1,20,51,7142017-2018 1,15,65,642 1,15,65,6422018-2019 1,37,09,694 1,37,09,6942020-2021 1,60,44,139 1,60,44,1392021-2022 2,04,29,874 20,42,98,742022-2023 74,86,981 74,86,9812023-2024 11,77,893 11,77,8932024-2025 7,71,020 7,71,020

TOTAL 69,32,079 3,85,65,279 9,68,23,924 14,23,21,282

19. Derivatives : Outstanding as at Balance Sheet date

Particulars CurrencyAmount in Foreign Currency

PurposeAs at 31st March2009 2008

Principal only swap USD 9.602 Mn. 14.53 Mn. Cost reduction

The above contracts are for hedging purpose and not for speculation.

Contingency loss on account of derivatives transaction NIL ( Previous Year of Rs.1249.99 lakhs).

20. The Company has exercised the option of Foreign Exchange Difference on account of Foreign CurrencyConvertable Bonds as per Notification No.GSR225(E) Dt.31-03-2009 issued by Ministry of CorporateAffairs. Out of Rs.1063 lakhs foreign exchange Loss of Current Year, an amount of Rs.729.24 lakhs wascapitalised during the year, being the net of withdrawl of Rs.333.76 lakhs from General Reserve, onaccount foreign exchange gain of earlier years.

21. a) During the year 2006-07 the Company has issued 2% coupons Foreign Currency ConvertibleBonds for an amount of USD 10 Million at par. These Bonds are convertible into equity shareswith a fixed rate of exchange of Rs.44.09 per 1 USD at initial conversion price of Rs.85/- per shareat the option of the bond holders at any time on or after 16th February, 2007 and on or beforeJanuary 17th 2012 which is 30 calender days prior to the maturity date. The Company has alsoan option of force each bondholder, after 2 years, if the stock price for 30 consecutive days isabove 150% of conversion price to convert up to USD 1 Million of their holdings into shares inevery six months period. If no conversion takes place the bonds are redeemable on 17th February,2012, at their accreted principal amount calculated from the issue date (being a price equal to140.48% of the outstanding principal of the bonds) giving a yield to maturity of 8.5% per annum.

Rs.


45


b) The proceeds of the above issue have been utilized towards issue expenditure, modernization andexpansion of existing units and new units taken up at Rajapur and Kucherkal units.

c) As the variables are indeterminate at present, the premium on actual redemption is not computableand will be recognized, as and when the redemption option is exercised, as a charge to theSecurities Premium Account in terms of Section 78(2)(d) of the Companies Act, 1956

22. The following are the details of Deferred Tax Liability :-

DEFERRED TAXATION

PARTICULARS AS AT AS AT31.03.2009 31.03.2008

Rs. Rs.

Deferred Tax Liabilitites

Depreciation 8,01,78,284 6,71,65,549

Deferred Revenue Expenses – 1,80,656

8,01,78,284 6,73,46,205

Deferred Tax Assets

Benefits to Employees 15,32,558 8,58,654

Others – –

15,32,558 8,58,654

Deferred Tax Liability 7,86,45,726 6,64,87,551

23. Segment information for the year ended 31.03.2009

The Company is having only one business segment namely "yarn". Hence, segment reporting as per AS-17 does not arise.

24. Related party disclosure

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosuresof transactions with the related parties as defined in the Accounting Standard are given below

Key Managerial Personnel :-

Sri. R.K.Agarwal : Managing Director

Sri A.K.Agarwal : Executive Director

Relative of Key Managerial personnel.:-Smt. Neha Agarwal - Spouse of Executive Director

Current Year Previous Year

Nature of Transactions Key Management Relative of Key Key Management Relative of KeyPersonnel Managerial Personnel Managerial

Personnel Personnel

Salary 4,48,000 3,86,400

Balance as on 31-03-2009

Payable 3,14,583 23,14,759

(Amount in Rs.)

46



25. Basic & Diluted Earning per Share as per Accounting Standard No.20

Current Year Previous Year(Rs.) (Rs.)

Profit after Tax 3,00,52,531 7,77,20,258

Weighted average No. of Equity Shares 1,47,60,135 1,41,32,455

Basic & Diluted Earnings per Share 2.04 5.50

26. The deductions on Land of Rs.5,250/- and Non-factory Buildings of Rs.29,78,181/- in Schedule 5 representsCompensation received from Tahasildar, Shadnagar on acquisition for formation of 2 lane to 4 lane NH-7 road basing on 3 D Notification issed by the NH-7 Authority and Joint Collector, Mahabubnagar.

27. In the opinion of the Board, the current assets and loans and advances have a value on realisation in theordinary course of business atleast equal to the amount at which they are stated.

28. As per the notification 30, Dt.09-07-2004 issued by government of India, the Company has opted forexempted route in respect of excise duty on Yarn. Hence the company neither collected nor paid theduty on its products and also not availed any CENVAT credit on purchase of raw materials.

29. Paise have been rounded off to nearest rupee.

30. Previous Year's Figures have been regrouped wherever necessary.

31. Additional information on pursuant to provisions of Part IV of the companies Act,1956 is furnished inAnnexure - 'A'.

Schedule - 22SIGNIFICANT ACCOUNTING POLICIES1. Accounting Convention:

The Financial statements are prepared based on historical cost convention and in accordance withgenerally accepted accounting principles.

2. Fixed Assets:

Fixed Assets are stated at cost net of deprectiation provided in the statements. Costs of acquisitationof fixed assets is inclusive of all direct and indirect expenditure upto the date of commercial use.

Depreciation is provided on straight line method in accordance with the rates prescribed under ScheduleXIV to the Companies Act,1956

3. Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost of Rawmaterials arecomputed by using weighted average method. Stores & Spares are computed by using FIFO method.

4. Derivative Transactions :

The company uses derivative financial instruments such principal only swaps for the purpose of costreduction. In case of loss the transactions having protection are taken as contingent liability and whereprotection is knocked out has been written off to profit & loss a/c


47

5. Investments:

Investments are stated at cost and diminution in the value, which is permanent in nature, is provided for.

6. Contingent Liabilities:

Liability in respect of contingent nature are mentioned by way of note to accounts and will be paid /provided on crystallisation.

7. Employee Benefits :

As per AS 15 Employee benefits - the disclosure of employee benefits as defined in the AccountingStandard are given Below :

Company's contribution to PF determined under relevant statute and charged to Revenue. The gratuitycontribution has been made on the basis of actuarial valuation determined under projected unit creditmethod. Liability for Leave encashment is provided for on the basis of the Accrued leaves at the closeof the year.

8. Sales:

Sales represent the amount receivable for goods sold including excise duty and sales tax thereon.Incentives on export sales are recognised as income on accrual basis.

9. Foreign Exchange Transactions:

Foreign currency transactions are recorded at the rates prevailing on the date of the transactions. Themonetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling onthe Balance Sheet date or at the rates of exchange fixed under contractual arrangements. Foreigncurrency assets and liabilities are stated at the rate of exchange prevailing at the year end and resultantgains / losses are recongnised in the Profit & Loss account

10. Accounting for Income Tax :

The Provision for taxation for the year, comprising of current tax and deferred tax is based on tax liabilitycomputed in accordance with relevant tax rates and tax laws as at the balance sheet date. Provisionfor deferred tax is made for all timing differences arising between taxable income and accounting incomeat rates that have been enacted or substantively enacted as at the balance sheet date. Deferred taxassets are recognised only if there is a reasonable certainty that they will be realised and are reviewedfor the appropriateness of their respective Carrying value at each balance sheet date.

11. Lease Rentals :

Lease rentals in respect of leased equipment is being charged to the Profit & Loss account.

Signatories to Schedules 1 to 22




48


Annexure - A Forming part of Schedule - 21Information pursuant to part IV of Schedule VI of the Companies Act, 1956.BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESSPROFILE AS AT 31ST MARCH, 2009

I. Registration DetailsRegistration No. : 3961 State Code : 01Balance Sheet Date :31st March, 2009

II. Capital raised during the yearRs.in 000's Rs.in 000's

Public Issue : NIL Rights Issue : NILBonus Issue : NIL Private Placement : NIL

Preferential Allotment : 20002

III. Position of Mobilisation andDeployment of Funds Rs.in 000's Rs.in 000'sTotal Liabilities : 3027505 Total Assets : 3027505

Sources of FundsPaid up Capital : 161486 Reserves & Surplus : 510958Secured Loans : 1693194 Unsecured Loans : 583221Share Warrant Application : NIL Deferred Tax Liability : 78646

Application of Funds:Net Fixed Assets : 2559557 Investments : 232Net Current Assets : 467716 Misc.Expenditure : NILAccumulated Losses : NIL

IV. Performance of CompanyTurnover & other income : 2095232 Total Expenditure : 2062286Profit before Tax : 48976 Profit after Tax : 30053Earning per Share in Rs. : 2.04 Dividend rate : NIL

V. General Names of Three PrincipalProducts/Services of Company(as per monetary terms)Product Description: Item Code No:i) Cotton Yarn 520300ii) P V Yarn 550990iii) 100% Polyester Yarn 550510





49

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009

2008 - 2009 2007-2008PARTICULARS Rs. Rs.

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit Before Taxation and Extraordinary Items 4,89,75,706 10,55,15,688

Adjustment for:

Depreciation 8,09,88,729 7,63,87,931

Finance Charges 90,96,9691 7,75,56,399

Interest Income (1,33,53,873) (1,46,49,631)

Miscellaneous expenses written off 12,50,210 12,50,214

(Profit) / Loss on sale of Fixed Assets (Net) 7,18,820 2,84,902

Operating Profit Before Working Capital Changes 20,95,49,283 24,63,45,503

Adjusted for :

Inventories 1,29,35,310 (5,32,01,121)

Sundry Debtors 1,23,77,387 (87,97,682)

Loans and Advances (4,01,36,199) (6,01,98,266)

Sundry Creditors 11,40,34,066 3,06,36,891

Cash Generated From Operations 30,87,59,847 15,47,85,325

Direct taxes paid (net of refunds) 1,08,21,913 1,72,65,568

Net Cash From Operating Activities (A) 31,95,81,760 17,20,50,893

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (82,28,04,233) (50,72,99,003)

Proceeds from Sale of Equipment 42,62,067 9,39,000

Interest received 1,19,89,932 1,47,22,770

(Purchase)/Sale of Investments (NET) 5,00,000 50,000

Net Cash Used in Investing Activities (B) (80,60,52,234) (49,15,87,233)

50





2008 - 2009 2007-2008PARTICULARS

Rs. Rs.

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issuance of Share Capital & Premium 7,62,10,000 –

Proceeds from Long Term Borrowings 41,46,32,020 39,87,30,879

Proceeds from Bank Borrowings 12,61,25,957 1,98,47,314

Repayment of Long Term Borrowings (10,48,99,035) (5,55,39,654)

Hire purchase Loans taken 81,58,885 20,67,345

Hire purchase Loans paid (41,27,694) (32,85,751)

(Increase) / Decrease in General Reserve (3,33,76,000) –

Increase / ( Decrease ) in unsecured loans (1,66,97,615) (3,51,31,281)

Interest paid (8,85,38,252) (7,84,20,111)

Equity Dividends paid (including Tax on Dividend) (94,31,174) (1,90,30,160)

Net Cash From Financing Activities (C) 368057092 22,92,38,581

D. NET INCREASE/ (DECREASE) IN CASH AND (A) + (B) + (C) (11,84,13,381) (9,02,97,759)

CASH EQUIVALENTS

Closing Balance of Cash and Cash Equivalents 10,54,93,773 22,39,07,154

Opening Balance of Cash and Cash Equivalents 22,39,07,154 31,42,04,913


51

SURYAJYOTI SPINNING MILLS LIMITEDRegistered Office: Burgul Village, Farooqnagar Mandal, Mahabubnagar District. A.P.

Corporate Office: 7th Floor, Surya Towers, 105, Sardar Patel Road, Secunderabad - 500 003.

ATTENDANCE SLIP

26th Annual General Meeting, 26th September, 2009 at 11.30 A.M.

Name of the Shareholder

Name of Proxy

Signature of Member / Proxy

I hereby record my presence at 26th Annual General Meeting of the Company

at Registered Office: Burgul Village, Farooqnagar Mandal, Mahabubnagar District, A.P.

SIGNATURE OF THE MEMBER OR THE PROXY ATTENDING THE MEETING

If Member, Please sign here If Proxy, Please sign here

Note: This form should be signed and handed over at the Meeting Venue. No duplicate Attendance Slip willbe issued at the Meeting Hall. You are requested to bring copy of the Annual Report to the Meeting.

* Applicable for investors holding shares in electronic form.

�SURYAJYOTI SPINNING MILLS LIMITED

Registered Office: Burgul Village, Farooqnagar Mandal, Mahabubnagar District. A.P.

Corporate Office: 7th Floor, Surya Towers, 105, Sardar Patel Road, Secunderabad - 500 003.

PROXY FORMRegd. Folio No. ______________

I/We................................................................................................................................... Resident of

................................................................................................................................ being a member/

members of SURYAJYOTI SPINNING MILLS LIMITED hereby appoint

Sri/Smt. .................................................................. of ............................................. or failing him/her

Sri/Smt. .................................................................. of ...................... as my/our proxy to attend and

vote for me/us on my/our behalf at the 26th Annual General Meeting of the Company to be held

at Registered Office: Burgul Village, Farooqnagar Mandal, Mahabubnagar District, A.P., on Saturday,

the 26th September 2009 at 11.30 A.M. and at any adjournment thereof.

As witness my/our hand(s) this ...................... day of ............................ 2009.

Signed by the said ...........................................................

NOTE: The Proxy Form must be deposited at the Registered Office/Corporate Office of the Company, notless than 48 hours before the time for holding the meeting.

* Applicable for investors holding shares in Electronic Form.

* DP ID:

* Client ID:

Regd. Folio No.

No. of Shares held

* DP ID:

* Client ID:

Affix

Re.1/-

Revenue

Stamp

52


Documents

SURYAJYOTI SPINNING MILLS LIMITED Report 2008-09.pdf · SURYAJYOTI SPINNING MILLS LIMITED NOTICE ... of the Company at Burgul Village, Farooqnagar Mandal, Mahabubnagar District, Pin-509